The Federal funds rate is the interest rate that a depository institution (e.g. banks) lends funds maintained at the Federal Reserve to another depository institution, and this rate since October of 2008, has not been higher than 1.5%, and currently resides at 1.25% as of October, 2017, after being quiescent at 0.25% for over seven years, indicating that for the last ten years, the United States along with other nations, has had an historically low Federal Funds rate, which is completely abnormal to the history of this rate from previous decades.
While there are many ostensible reasons why the interest rates have been so low for so long, the most prevalent reason given by mainstream media is because of the financial crisis, specifically the housing mortgage crisis and the collateral debt obligations (CDO) created in order for banks to profit, only for the buyers of such to discover that many CDOs were essentially toxic, leading to the severe discounting or outright default of these CDOs, along with the material assets (e.g. houses) plummeting in value, effectively making these mortgage loans significantly higher than the revised intrinsic value of such homes, plunging the loaners of mortgages along with the buyers of CDOs to the brink of a catastrophic meltdown. The Fed felt that they had no choice but to effectively drop their Federal Fund rate to essentially zero, so as to postpone and to stave off debt which already could not successfully be serviced to the lowest level that could be created in the hopes that by doing so, this would allow debtors to get their house in order.
These super low interest rates did reduce the debt service load for many debtors, so that debts that would have cost billions of dollars more to service, were essentially transferred from the debtor to those that had monetary assets (e.g. savers), so that those that previously parked their money in Certificates of Deposit (CD) or other cash-like instruments, while still having such available to purchase, discovered to their dismay, that CDs rather than paying their somewhat traditional 5.25% were instead now yielding 0.25%.
This would imply that in today's new super lower interest rate environment, that it has never been better to be a debtor than a saver, which is true to a certain extent, and that extent basically only is accurate for those that have excellent credit and large monetary assets, for those people and institutions can receive loans at rates previously unheard of for any appreciable length of time, and thereby leverage up their investments so as to make money via real estate or equities or other financial maneuvers. On the other hand, while debtors find that servicing their debt has been significantly reduced, the problem that they still have is the fact that they have debt that they cannot seem to escape from, for debt can never be paid back, if the debtor cannot generate the income or growth to pay such debt back, and if the assets, if there are any, used as collateral for such a debt, are worth less than the debt, indicating that the creditor will not wish to foreclose on such a debt, for there is little or nothing to collect, but rather the creditor will desire tokeep the debt open forever, continually bleeding their debtors, so as to at least receive something, for if and when, the creditor has to write off what are uncollectible debts, than the creditor has lost that asset for good.
A decade of super low interest rates are a reflection that the economic growth rate in virtually all western nations is very low, that the debt load within these nations is already so high that higher interest rates on debtors would wrought financial disaster, and that therefore continual low inflation, low growth, and an overall precarious financial situation is the norm, for the balance sheets of nations such as America, shows a monstrous debt load, increasing yearly, with absolutely no fiscal plan to deal with it, so that the creditors of American debt, recognize that interest rates must continue to remain low into the foreseeable future, or a worldwide recession will occur, or much, much worse.